Understanding Poland’s Future

Making forecasts is a fool’s game, and while I’ll be the first to admit that the adjective in question is applicable to me more often than not, it’s not because of making forecasts!

This post, then, is not about quantitative forecasts about where Poland’s economy might go. It is, instead, about Poland’s recent trends that might continue in the near future, and what that would mean for Poland, and her neighbours.

  1. “The attractiveness of their promises are difficult to outdo, as they represent a long-desired ambition by Poles. However, on other issues the PiS is found wanting and at odds with the values and opinions of the majority of Poles. The conflict between local level activism and centralistic ambition will determine the course of the Polish politics in the next decade. Poland’s recent history surely should not let us think that the outcome is already known. ”
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    On how Poland’s recent political trends don’t bode well for the future.
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  2. “In 1989, it would have been considered utopian or plainly misplaced to imagine that, in 2019, most Polish people would live in the countryside despite only 10 per cent of the population working in agriculture. Today, the countryside is more than ever the ‘happening’ place in Poland. Four trends drive this phenomenon: re-ruralisation, de-agrarisation, de-urbanisation, and internal migration.”
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    This report came as a complete surprise to me. The notion, as an Asian and especially as an Indian, that urbanization will decline going forward was completely (pardon the pun) foreign to me. Also, the first time that I read about “water in the tap” – that’d certainly be my pick.
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  3. “The growth rate is predicted to continue slowly decreasing in the years to come and should reach -0.50% by 2035. The population is predicted to be 37,942,231 by 2020 and 36,615,500 by 2030.”
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    Those are literally the only two lines in the entire article about the future of Poland’s demographics. That being said, the article is still worth reading if you want to better understand Poland’s demographics today, about which I do not think we have learnt so far.
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  4. “They assert that the modern Polish Republic rests on “two pillars: the European Union and NATO,” and that these communities are not at odds with one another. This is the strategic balance this is needed to shield Poland. What it is pursuing at the moment is strategic imbalance. As the saying goes in Polish, “nie stawiaj wszystkiego na jedną kartę”—don’t gamble everything on one card.  ”
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    Broadly speaking, the article suggests that Poland cosying up to the United States of America might not be the best idea for securing Poland’s future, not least because it is subject to the whims and fancies of just one man.
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  5. “A few weeks ahead of COP24, the Ministry of Energy published a draft Energy Policy for Poland 2040, by the Ministry of Energy, with updated projections beyond 2030–perhaps the beginnings of a clearer path toward the green transition. The report provides a summary of Poland’s vision for eventually transforming the energy sector. Coal will remain a significant part of the energy mix through 2030 and decline more rapidly by 2040, shifting to nuclear power, renewable energy and high-efficiency cogeneration.”
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    A useful summary of Poland’s economics since 1989, its stellar performance in terms of achieving climate change goals until 2015, and then a tapering off of its enthusiasm – and some optimism about its targets in the two decades to come.

Tech: Links for 24th December, 2019

Beginning today through until the 31st of December, I’ll link to five pieces from each category that I enjoyed collating this year. There’s no science or overt logic to any of them: I’m just going to scroll through the posts, and replug those that I enjoyed re-reading. Hopefully, next year, I’ll get a little more scientific about it. Happy holidays!

  1. Let’s help ourselves understand Stratechery and it’s Aggregators concept.
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  2. I wish the world would get more excited about Oumuamua!
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  3. I hope to be working (from a writing papers viewpoint) on urbanization in the coming year.
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  4. I am an unabashed fan of Google, and it’s products. With some caveats, about which I hope to write in the coming year. But kudos to them for doing what they do, especially in education!
  5. Five great reads from The Ken.

When the price is high…

… we react by trying to curtail demand.

What if, instead, we worked on increasing supply?

Austin Vernon and Eli Dourado ask just such a question in a lovely paper titled “Energy Superabundance: How Cheap, Abundant Energy Will Shape Our Future

In this policy paper, authors Austin Vernon and Eli Dourado explore what life would be like with endless energy. Coining the term “energy superabundance,” they look at energy policy, not in the usual sense of trying to restrict energy consumption, but as a way to promote energy abundance—a future in which energy is so clean and plentiful, limiting consumption would be entirely unnecessary.

https://www.thecgo.org/research/energy-superabundance/

The paper is lovely for a variety of reasons:

  1. You get to learn a lot about what is going at the cutting edge of a variety of sectors in terms of technological advancements across transportation, agriculture, water usage and material deployment. There are also sections on urbanization, and some speculation about what lies ahead in a concluding section.
  2. It’s sprinkled with interesting factoids which add, at the margin, to your model of the world. Such as Marchetti’s constant, for example, or about start-ups like Nuro, or that 4% of all electricity consumption in Denver goes towards growing cannabis.
  3. The most exciting (tantalizing is a better word, I suppose) prospect is for the deployment of miniaturized nuclear technology. As the paper says, this is still a ways off, but the prospect of accessing electricity without being dependent on a grid is a giddying one.
  4. There’s a bit of econ history as well, such as a brief mention of the Jevons Paradox. ANd speaking of economics, there’s a fascinating paragraph about aircraft economics.

But above all of these, I liked reading the paper for two main reasons. First, this is a paper that is about optimism and technology, and in my opinion, this is a relatively underexplored niche. Underrated for sure, at any rate.

And second, because as a person who loves introducing the principles of economics to people, it’s a great way to help people understand that there’s more than one approach possible when confronted with high prices. Demand curtailment and the drive for efficiency is one – but dramatically increasing supply is another.

And technological optimism is worth a deeper think, no matter where you fall on the spectrum in this regard.

Here is Eli Dourado on Twitter, and here is Austin Vernon.

Six Big Economic Ideas

About five years ago, The Economist published a series of essays, based around six big ideas in economics. Each essay is really well written, and I would strongly recommend that you read them. In no particular order, they’re about the Stolper Samuelson theorem from international trade theory, Minsky’s work on business cycles, Akerlof’s paper on information asymmetry, Keynes and the idea of the fiscal stimulus, Nash and early developments in game theory and finally the Mundell-Fleming model.

I got reminded of these essays when I wrote about Robert Mundell’s passing. And that, in turn, reminded me that I had wanted to see which ideas would make my list of six big ideas in economics. God knows if I’ll ever get around to writing these essays up – I know I would like to – but for what it’s worth, today is just about the list of ideas.

My criteria for selecting them is the following:

  1. The idea should be genuinely big. Other economists may disagree about whether it should make the cut or not, and that’s fine (in fact, that’s kind of the point. Maybe they’ll write their own lists!), but there should be no disagreement about the yuuugeness of the idea.
  2. It should be easy enough to explain in a single essay. Which in turn means it should be relatively simple, and not dependent on other big ideas for it to make sense. “Mr. Keynes and the Classics” is out, for example.
  3. It should be interesting, and applicable to the real world. Which, sadly, isn’t always a guarantee in academia.

For what it’s worth, here is my list of six big ideas in economics:

  1. Elinor Ostrom and her work on Common Pool Resources: there’s always a part of me that wonders if this is an idea that was underrated by economists and fairly rated by the rest of the world all along. Even the Wikipedia article notes that fieldwork played an important role in the development of her theories. Note that this isn’t (at all!) a criticism of Ostrom – but yes, it could be construed as a criticism of the rest of us economists. Maybe we just don’t look at the world often enough?
    Ostrom certainly did, and her conclusions have helped us economists understand how the world has been working so far, and how it might be made to work better in the future.
  2. Ronald Coase and The Theory of the Firm: Most people would be aware of the Coase theorem, and there is a case to be made for going with that paper rather than this one. But I remain fascinated with The Theory of the Firm, not least because of further developments in this field (Alchian and Demsetz, for one, and Hart and Holmstrom for another. There are many others, of course). In addition, how the theory has held up, and will hold up, because of the advent of modern communication, monitoring and signaling tools is a fascinating research question.
  3. Herbert Simon and Satisficing: “The Truth Lies Somewhere in the Middle” has become one of my favorite ways to simplify complex issues. Herbert Simon’s take on it was as follows: “decision makers can satisfice either by finding optimum solutions for a simplified world, or by finding satisfactory solutions for a more realistic world. Neither approach, in general, dominates the other, and both have continued to co-exist in the world of management science.” And the scissor analogy remains one of the most beautiful explanations I have ever come across, of anything.
  4. Dani Rodrik and premature deindustrialization: This idea is relatively speaking more recent, and in some ways needs to be updated already. But if you leave aside the specifics and think about the major point that is being made: poor countries in the 21st century will not take the same path of development as did the poor countries of the 20th century, it is certainly a very powerful and all-too-relevant field of study. Recommended pairing: How Asia Works, by Joe Studwell.
  5. Partha Dasgupta and the inclusion of nature in GDP: I’ve phrased the idea very poorly, I am sure, and I have not finished reading the report – barely started, if anything. Plus, perhaps I am suffering from recency bias, who is to say? But I remain convinced that we will see a better, more realistic way to measure our economic wealth this century – and if we do, Sir Partha Dasgupta and his work will have led the charge.
  6. Ed Glaeser and the importance of urbanization: Cities and urbanization will define our lives in this century, current pandemic notwithstanding. And while there is a long list of economists who have been working in this area for a very long time, my favorite book about what I think will be the most important topic of study in economics this century has been written by Ed Glaeser. It is a love letter to the idea of the city, and I think more people should read it to understand why urbanization, when done well, is a phenomenon to be celebrated, and not an idea to abjure.

I hope, in all sincerity, that you strongly disagree with my list, and come up with your own!

RoW: Links for 11th September, 2019

  1. “Bangkok has 9.7 million automobiles and motorbikes, a number the government says is eight times more than can be properly accommodated on existing roads”
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    As an Indian, this is a somewhat reassuring read, in the sense that misery loves company!
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  2. A little vague, but I got to learn what sanuk means.
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  3. “The rapid expansion of the middle class among India’s 1.3 billion people has prompted Thai authorities to upgrade their estimates of Indian visitors. At least 10 million are now expected to arrive in 2028, a more than five-fold increase on 2018 visits. That sort of growth trajectory would mimic the rise of Chinese tourists, who jumped from 800,000 in 2008 to more than 10 million last year.”
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    I can account for three out of those 2 million.
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  4. “Obesity has reached alarming levels in Thailand, which ranks as the second-heaviest nation in Asia, after Malaysia. One in three Thai men are obese, while more than 40 percent of women are significantly overweight, according to Thailand’s national health examination survey.”
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    This was, to me, rather surprising.
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  5. “A couple of generations ago, Thais were rural folk who ate at home and took pride in offering food to the monks, but as they have moved to the cities they are likely to grab a polythene bag of curry on the way home to reheat. There is almost a stigma attached to cooking for yourself. “There is an embarrassment about spending time in the kitchen, it is seen as old-fashioned and a sign that you haven’t made it.”
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    On why Thai street food in Bangkok is so delicious. The article is about much more than that, but this was my main takeaway.

The Long Reads on The Long Road To Breaking Free

Last week marked the 75th anniversary of our Independence. A lot of reflective essays were written to mark this special occasion, and some of them made for excellent reading.

But as a student of economics, I haven’t found anything better than a fantastic essay written by Niranjan Rajadhakshya in the Livemint. It makes for excellent reading, and there is enough material in there to keep students busy for years, let alone a semester. And I simply cannot do justice to the entire article in one blogpost.

So what we’re going to do is that we’re going to spend this entire week going through this article at our own leisure. I’ll give a broad overview today, and we’ll explore some of the finer nuances in the other four blogposts to come this week.


Let’s begin with the title itself. I don’t know if the choice of headline was intentional, and it is usually the case that the headline is not chosen by the author of the piece. But that being said, surely this is a nod to an excellent book written by Vijay Joshi? I, at any rate, interpret it as such, and strongly encourage you to read the book if you haven’t done so already.

Most essays would have begun with a nod, at the very least, to Pandit Nehru’s speech on Independence Day. It remains an excellent speech, and worth a re-read (or re-listen, if you so prefer). But Niranjan begins his essay with a quote from Sardar Patel instead, underlining the need for an economic regeneration in India’s case.

What might this entail? Niranjan highlights four major problems:

  1. Stagnation of economic output
  2. A chronically underfunded state
  3. A dire food situation
  4. A narrow industrial base centered around a few large cities

For each of these things to improve, Niranjan says, we needed a structural change in the way the Indian economy functions.

  1. People needed to move from farms to factories
  2. Almost consequentially (my interpretation, not Niranjan’s statement), we needed more urbanization
  3. And finally, we needed to move from household enterprises to formal enterprises

Why are these changes necessary in order to bring about a structural change in the Indian economy, and why is a structural change deemed necessary? These are excellent questions to ask if you are a student of economics. And the answer to these questions is a great way to begin your journey into the world of development economics.

But very simply put, here are the answers:

  1. Farms alone would not be able to generate the kind of surpluses necessary to raise the incomes of Indians, and certainly not as fast as was required.
  2. Try plotting per capita incomes for nations versus their rates of urbanization.
  3. Reflect on each of the figures in this paper (read the whole thing if you can, but please do look at all the figures)

Reflect on two paragraphs, which I will excerpt here without additional comment:

The famous dissent of economist BR Shenoy provided four red flags. First, the heavy dependence on deficit financing to build industrial capacity would lead to balance of payments pressures. Second, the focus on capital goods rather than wage goods for mass consumption would be inflationary, as people employed in new industries would get money incomes but nothing to spend them on. Third, high taxation to finance the plans would weigh on citizens. Fourth, increasing government control of the economy would eventually harm Indian democracy.

https://www.livemint.com/politics/news/the-long-road-to-breaking-free-11660502122505.html

In his landmark budget speech in July 1991, Manmohan Singh cogently argued that the balance of payments crisis was a symptom of a deeper malaise: macroeconomic imbalances, low productivity of public sector investments, loopholes in the tax system, indiscriminate protection that had weakened the incentive to export, lack of domestic competition, a weak financial system that was not allocating capital efficiently, lack of access to the latest technology, and much more. The great achievement of 1991 was not each reform in isolation, but the rollout of a comprehensive reform programme where different parts complemented each other.

https://www.livemint.com/politics/news/the-long-road-to-breaking-free-11660502122505.html

Was it any surprise that the 1970’s were a lost decade? Was it any surprise that Amitabh Bachchan was an angry young man in the 1970’s? What if the budget of 1991 instead happened to be the budget of 1978 instead (or even earlier, now that we’re dreaming)?


To say nothing of the future! Niranjan ends his essay with four challenges that await us in the future:

  1. India needs to develop more, and develop more equitably at the same time? Is that possible, especially while remaining a political democracy?
  2. Jobs! Niranjan speaks of our inability to create quality jobs for the millions who are now leaving agriculture, but the problem is even more urgent, because not enough people are able to leave agriculture in the first place!
  3. What of energy? How are we looking to anticipate the problems that will inevitably crop up, and start thinking about how to deal with them?
  4. And Niranjan ends on what I interpret to be a quasi-pessimistic note by asking where we will find ourselves in 1947. The reason I find it to be a quasi-pessimistic ending is because if the answer to this question isn’t clear by now, that ought to worry all of us. It certainly worries me.

We’ll take a look at the first two decades, roughly speaking, of India post independence tomorrow, using this excellent column as a reference. See you tomorrow!

Video for 10th March, 2019

A very short talk on an impossibly complex topic – urbanization, and how to do it right.

Tech: Links for 6th August, 2019

Smart Cities is a phrase that has been bandied about in India for a while now, but nobody who actually lives in any city in India can claim in good conscience to actually live in one.

What exactly is a smart city? What does it entail? What are the minimum qualifications to be thought of as one, what are the costs involved? Are all costs economic – as in, might it be rather lonely to be a part of a smart city? Rather than spend time defining each of these things, today’s links are about a city in South Korea that very few of you have likely heard of: Songdo.

  1. “Built on 600 hectares (1,500 acres) of land reclaimed from the Yellow Sea off Incheon, about 56 kilometres (35 mi) from the South’s capital Seoul, Songdo district is the largest private real estate development in history. By its completion date in 2015, the district was planned to contain 80,000 apartments, 5,000,000 square metres (50,000,000 sq ft) of office space and 900,000 square metres (10,000,000 sq ft) of retail space. The 65-floor Northeast Asia Trade Tower became South Korea’s tallest building. Computers have been built into the houses, streets, and offices as part of a wide area network.”
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    From Wikipedia. Reading this article also informs us that while a lot of us may not have heard of Songdo, we certainly have seen it.
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  2. A link (Business Insider) that has lots of pcitures, and information about Songdo’s urban density, transport, remoteness, trash collection and much more.
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  3. “This was all pretty slick, but where were the levitating buildings and flying cars we had envisioned? The city’s futurism was incremental, as it turned out, coexisting with the familiar and mundane. We had expected a city 25 or even 50 years ahead of the rest of the world; instead, Songdo felt like 2017—still the future, perhaps, but not the promised land of science fiction. There were mostly just subtle, somewhat odd differences from the cities of the present—for example, in Central Park, a small island filled with rabbits, a cordoned-off section with captive deer, and the occasional hidden speaker playing relaxing classical music.”
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    From a while ago… an article from the Atlantic talking about how Songdo was in 2014, and how it might turn out.
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  4. “The streets, footpaths and cycle lanes and racks are strangely empty for such a large city, there’s no presence of culture – no museums, theatres and just one cinema. On weekends, the cycle racks are empty and the area is desolate. One critic said it had a “Chernobyl-like emptiness” to it.
    Now it’s trying to entice US citizens to save the US$40 billion project from failure with the construction of a colossal “American Town”.”
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    People, it would seem, make cities what they are. Doing it the other way around seems to have not worked. Exercise: would you say this is good news for India?
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  5. And another article from CityLab that says more or less the same thing.

Links for 17th May, 2019

  1. “Despite the 73rd and 74th Constitutional amendments, except in a few states, there has been little progress at decentralization—to both rural and urban local bodies. Most state governments have been reluctant to devolve the functions, funds and functionaries for delivering public services at the local level. The functions assigned are unclear, funds uncertain and inadequate, and decision-making functionaries are mostly drawn from the state bureaucracy. Local bodies do not even have powers to determine the base and rate structure of the taxes assigned to them. The states have not cared to create institutions and systems mandated in the Constitution, including the appointment of the State Finance Commissions, and even when they are appointed, states have not found it obligatory to place their reports in the legislature. In fact, the local bodies are not clear about delivering local public goods, with the prominent agenda of implementing central schemes obscuring their functions.”
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    M. Govinda Rao pulls no punches in pointing out how and why decentralization hasn’t (and likely will not) taken place in India. This is a conversation more people need to be having in India – and in particular, to aid meaningful urbanization.
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  2. “I love this paper because it is ruthless. The authors know exactly what they are doing, and they are clearly enjoying every second of it. They explain that given what we now know about polygenicity, the highest-effect-size depression genes require samples of about 34,000 people to detect, and so any study with fewer than 34,000 people that says anything about specific genes is almost definitely a false positive; they go on to show that the median sample size for previous studies in this area was 345.”
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    Slate Star Codex helps us understand the importance of learning (and applying!) statistics. The website is more than worth following, by the way.
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  3. “Sucking the life out of a mango is one of those primal pleasures that makes life feel worthwhile. The process is both elaborate and rewarding. The foreplay that loosens up the pulp inside, the careful incision at the top that allows access without a juice overrun, and then the sustained act of sucking every bit juice from the helpless peel. Senses detach themselves from the body and attach themselves to the mango, and even mobile phones stop ringing. The world momentarily rests in our mouths as we slurp, suck and slaver at the rapidly disappearing pulp. The mango is manhandled vigorously till only the gutli remains which is scraped off till it has nothing left to confess. As is evident, there is no elegant way to eat this kind of mango, no delicate and dignified method that approximates any form of refinement, which is just as well, for the only way to enjoy a mango is messily.”
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    An excellent column about an excellent fruit – there isn’t that much more to say! I completely agree with the bit about serving aamras front and center, rather than as an afterthought, by the way.
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  4. “Welcome to the 4th Annual Top Economics Blogs list. For the 2019 edition, we’ve added many newcomers, as well as favorites which continue to provide quality insight year after year. Like lists in previous years (2018, 2017, 2016), the new 2019 list features a broad range of quality blogs in practically every economic discipline. Whether you are interested in general economics or prefer more specific topics such as finance, healthcare economics, or environmental economics; there is something here for you. You will also find blogs which focus on microeconomics, macroeconomics, and the economics of specific geographical regions.Whether you are a student, economics professional, or just someone with a general interest in how economic issues affect the world around you, you’re certain to find the perfect blog for your specific needs.”
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    The most comprehensive answer to that most perennial of questions: what should I read?
    Bonus! If you’re wondering how to keep up with all of this, this might help.
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  5. “India should do the same with our state capitals. The Union government can create fiscal and other incentives to encourage state governments to shift their capitals to brown- or green-field locations. Mumbai, Bengaluru, Hyderabad, Chennai, Jaipur or Lucknow, for instance, will continue to thrive even if the state government offices move out. Their respective states will benefit from a new urban engine powered by government.”
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    I have been sceptical about the feasibility of doing something like this – my reading of urbanization has always been that it more of an organic process – cities grow (or not) of their own accord, and rarely as a planned endeavor. But maybe I’m wrong?

India: Links for 9th December, 2019

Five rather eclectic links from a variety of issues pertaining to India. Also, my apologies about the delay in posting today! I’m traveling a fair bit, and there may be some delay in posts this week.

  1. Surjit Bhalla and Karan Bhasin present the other side of the story when it comes to the release (or lack of it) of the NSO consumption survey.
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  2. The Scroll sheds light on a little known issue today: austerity in marriages in India in the years gone past – enforced by the government!
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  3. Anupam Mannur and Pranay Kotasthane make the important, but not well known point that Bangalore needs more firms (and more people!) not less.
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  4. Via Mostly Economics, a lovely write-up about the fish traders of Madras.
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  5. 18000 birds died in Rajasthan recently. Here’s why.